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It's important to remember where we are in the cycle of things. Look at the price levels from the beginning of the chart to roughly mid-2007. These levels occurred during an economy that was growing slowing and heading into a recession. But also remember there was no credit crunchy at that time. Then look at the large rally that took place from mid-2007 to the early part of 2009. This rally occurred because of the credit crunch. Now prices are coming down from that level to more "normal" levels. In this situation, "normal" means we're getting away from the credit crunch and into more normal, less-stressed value levels. However, notice the MACD has given a buy signal and the RSI is right around 50. Also note that prices and the EMAs are in a very tight range indicating a lack of overall direction.
On the daily chart we have a rising RSI and MACD along with prices making a move about the (roughly) $91 level. Also note the 10 and 20 day EMAs are moving higher and both have crossed over the 50 day EMA.
Fundamentally let's ask ourselves what's going on. There has been talk of the need for a market correction for some time. That would lead to a flight to quality and safety and therefore a Treasury rally. However, there has also been tremendous Treasury issuance over the last few months which is going to continue for the foreseeable future. That means the market must continually absorb a ton of supply as it comes out. In other words, there are tremendous cross-currents in the market right now.
